Monday, December 29, 2014

Long time readers may recall a post from 2011 in which I wondered whether the Utica Shale formation, which unlike the shallower Marcellus Shale formation, extends well into Ohio, would be developed and become an economic boon to eastern Ohio. See, Uitca Bigger than Marcellus? It looks like that is exactly what has happened.

Below is an image reflecting the rise in production in the Utica since 2007, along with a map showing the Ohio counties beneath which the formation has been tapped to date. My understanding is that portions of the formation extend all the way into Indiana as well, and that it can be tapped throughout the Marcellus by deepening existing wells in that formation.

Production in the Utica took off in 2014 and promises to be larger still in 2015. The article linked below briefly summarizes the current state of affairs. As I explained in a separate post that year cheap energy from cheap natural gas is likely to fuel renewed interest in manufacturing in Ohio and Pennsylvania.

Thanks to enhanced oil and gas recovery techniques the United States has become a force to be reckoned with in the international oil and gas market. Our mature pipeline system and vast untapped reserves in the Green River / Fossil / Great Divide / Whashakie / Piceane and Uinta Formations in Colorado, Wyoming and Utah render us energy independent. It will be interesting to see how this impacts our foreign policy over the next 100 years.

Wednesday, December 24, 2014

If global warming represents real danger then real solutions must be considered. Instead, science deniers who insist the world is warming - even though it's not - refuse to embrace nuclear power and insist on policies that make carbon based energy more expensive. Likewise, many of these charlatans reject enhanced oil recovery out of hand. That is a big mistake.

Enhanced oil recovery, a kissing cousin to fracking for natural gas, has the potential to reduce carbon emissions more effectively than any processes devised to date. The article excerpted and linked below makes a powerful case for subsidizing the process as a means of leveraging coal reserves, extending the life of existing oil fields, creating a whole new industrial sector while simultaneously rendering energy derived from coal and oil carbon neutral.

In essences, the article argues for an energy policy the supports and enables decarbonization rather than existing policies that increase the cost of fossil fuels while doing little to reduce carbon emissions. The excerpt below describes the process.

Drillers have long understood that they leave most of their product in the ground. As oil is pumped, the pressure underground drops and it becomes harder to extract what remains. Typically, only about one-third of the oil in a given location can be economically removed. As a result, many supposedly “depleted” wells actually still contain most of their oil​—​just waiting for a technology that will make it economical to extract it.

In the early 1970s, drillers in west Texas figured out how to do just that, and the remarkable secret to their success was carbon dioxide. Pumping carbon dioxide into depleted wells not only increases the pressure, it also acts as a solvent, helping to separate oil from the cavities in the rock where it is trapped and the water it is often mixed with. This process enables oil companies to extract as much as another third of a site’s oil​—​essentially doubling a well’s productivity.

One might think that such a remarkable technology would be an overnight sensation. But in fact, we are nowhere near capitalizing upon EOR’s full potential. Since the 1970s, oil companies have injected about a billion tons of carbon dioxide into “depleted” wells, producing roughly 2.5 billion barrels of oil. About 6 percent of the oil produced in America is now extracted using this technique. We know it works​—​but it’s still a niche market.

What’s holding us back? A shortage of carbon dioxide. The carbon dioxide used in EOR operations is predominantly geologic​—​companies tap into underground deposits and extract CO2 for enhanced oil recovery and other commercial applications. That’s how it’s been done since the 1970s, but two important things have changed in recent years. Climate change has become the preeminent environmental concern, and new studies have shown that there is much more oil reachable through EOR than had been previously understood​—​so much so that geologic carbon dioxide supplies aren’t nearly sufficient. If we want to get that oil, we’ll have to capture carbon dioxide from industrial sources, such as coal-fired power plants.

Which brings us to the interesting place we find ourselves today: Our nation’s top environmental goal is reducing carbon dioxide emissions. And one of our top energy priorities is maximizing production from domestic oil reserves. Capturing carbon dioxide from power plants and using it for EOR could produce billions of barrels of oil while simultaneously putting billions of tons of carbon dioxide underground forever. Yet policymakers are doing next to nothing to take advantage of this unique opportunity. Instead, Washington is preparing to fight a pitched legal and political battle over proposed EPA power plant regulations that will, even if implemented, make barely a dent in America’s carbon emissions.

Read the whole thing. The author walks you through the history, the policy and the economics of enhanced oil recovery in a well reasoned essay that will leave advocates and opponents of AGW theories wondering why we aren't aggressively pursuing the policies outlined therein.

In the conclusion the author contends:

Carbon utilization is not receiving nearly the attention it deserves. We should be having a national conversation about enhanced oil recovery; instead, we are obsessed with issues that are almost trivial in comparison. The basic facts of the matter seem clear: Carbon capture and sequestration is probably indispensable to any pragmatic approach to decarbonization, and EOR appears to be the only practical way to underwrite the extensive up-front costs of developing carbon capture and sequestration technologies, infrastructure, and markets.

Using carbon capture and sequestration to enable enhanced oil recovery is the path to keeping coal in our energy economy while simultaneously achieving our environmental goals; without it, we are likely to lose both battles. The choice is between a declining-but-not-disappearing coal industry that can’t invest in innovation and a thriving, productive industry that could develop effective carbon management technologies. EOR could produce tens of billions of barrels of oil in America while sequestering billions of tons of carbon dioxide and driving over $800 billion in investments in decarbonization and energy production technologies. And it would establish a different model for meeting the climate challenge: Make decarbonization technologies affordable and productive rather than trying to make carbon-intensive energy more expensive.

Tuesday, December 23, 2014

Transitioning from an industrial economy to a knowledge economy presents challenges and opportunities. Deploying planning, design and construction tools virtually and physically is a challenge; leveraging the experience of others who’ve done so is an opportunity. ACI’s digital plan room initiative opens a window into the knowledge economy for those who participate in the Charitable Doll House Project. Contact Linda Bach at ACI to reserve a seat at a kick off session in February, 2015.

Two game changers accelerate the built industry’s transition to the knowledge economy. Building Information Modeling, (BIM) a digital planning and design process that enables virtual planning, design and construction, and Integrated Project Delivery, (IPD) a procurement and delivery strategy that empowers teams operating in the built environment to collaborate on delivery of planning, design and construction services. The Charitable Doll House Project will teach members to leverage BIM and IPD as game changers in construction.

ACI strengthens member companies by advocating on their behalf, providing timely and useful education on critical topics and enabling members to work together on integrated and collaborative teams that deliver excellent projects. The Charitable Doll House Project advances those core principles.

Skeptics say, “Doll houses? Please. BIM and IPD only work on large projects.” Wrong. BIM and IPD work on both large and small projects. In fact, the Charitable Doll House Project offers stakeholders opportunities to explore the use of BIM and IPD tools and processes in low cost, low risk environments. Integrated teams, formed and mentored by BIM and IPD enabled professionals, will build virtual and physical doll houses and sell those doll houses at the Spirit of Construction’s Silent Auction in October, 2015. Participants will learn valuable skills, while raising money for their favorite charity.

The Charitable Doll House Project launches in February via a series of interactive workshops and collaborative team building exercises led by Collaborative Construction and Benjamin, Yocum & Heather, LLC.

The Charitable Doll House Project offers ACI members an opportunity to create a new generation plan room while testing game changing tools and processes as collaborative members of cross disciplinary BIM and IPD enabled teams. While ACI and its partners facilitate formation of teams, relevant training, and access to critical tools, processes and expertise, integrated teams need only bring enthusiasm and a willingness to think outside the box!

ACI members interested in forming or joining a team should contact Linda Bach at ACI for a seat at a kick off session in February, 2015.

Saturday, December 20, 2014

As mentioned in an earlier post I'll be presenting in San Diego in January at the 5th Annual CPM Conference. I wanted to reach out to a wider audience regarding the trip to determine whether there are any companies in the area interested in hosting a low cost collaborative workshop while I am in town. Workshop can be tailored to meet the needs of the host and attendees so let me know what you need.

I arrive in San Diego on the morning of Friday, January 16, 2015 and I'm presenting in the afternoon on Saturday, January 17. Thus I'm free Friday afternoon or Saturday morning. On the outside chance any of you are attending the NAHB International Builders Show in Las Vegas, I'll presenting on the topic ofForensic BIM to the Architectural Subcommittee at that event on January 20, 2015.

Anyone interested parties should shoot me an email.

Meanwhile, I hope you all have a very Merry Christmas and a Happy New Year!

Thursday, December 18, 2014

In January I will be presenting at the National Association of Home Builders International Builder's Show in Las Vegas. The presentation, titled Forensic BIM, explores the scope and nature of the legal duties owed by built industry professionals and manufacturers in a BIM environment.

BIM as the new standard of care for designers is not a new concept. In fact I was quoted on the topic in an article published by For Construction Pros in 2011 titled, BIM Emerging as the New Standard of Care. As I explained in the article at the time I had remained silent on the topic for sometime out of a sense of loyalty / duty to my design clients.

Now however, the cat is out of the bag and creative lawyers will soon seek to hold other built industry professionals, like planners, general contractors, trade contractors and certain specialists to a heightened duty as the use of BIM expands. In addition, the new standard of care will likely extend to manufacturers as well.

In light of the foregoing I argue a good offense is the best defense and I prepare my clients to utilize BIM effectively and to reduce the risks to themselves and their clients.

I will be presenting at the 5th Annual CPM Conference in San Diego in January on two topics. The first presentation provides a jaded construction lawyer's perspective on the cultural and legal implications of BIM and IPD for Construction Project Management and the second is actually a short Katy's Castle Workshop.

Both events are on Saturday, January 17, 2015. The presentation is from 1:15 p.m. to 2:30 p.m. and the workshop is from 2:45 p.m. to 4:00 p.m.

Below are abstracts introducing the presentation and the workshop.

What are the legal and cultural impacts of BIM and IPD on CPM?

The industry wastes 40% to 60% of the labor, materials and time invested in capital projects; that’s a problem. Integrated teams capable of deploying better planning, design and construction processes can cut that waste in half; that’s a solution. Creating a legal framework that supports and enables planning, design and construction in a trust based environment; that’s a strategy. Creating a smart built culture on your next project; that leads to success. Join James L. Salmon, Esq. of Collaborative Construction to learn how BIM and IPD are impacting our industry’s fragmented, adversarial and paranoid culture and how construction professionals can created a smart built culture that is integrated, collaborative and cooperative and reduces waste and inefficiency.

Building Katy’s Castle: A Broken Built Culture Versus A Smart Built Culture

The broken culture pursuant to which capital projects are planned, procured, designed, constructed and ultimately operated and maintained must be repaired. That broken culture is fragmented, adversarial and paranoid. It must be replaced with a smart built culture that is integrated, collaborative and cooperative. Building Katy’s Castle exposes broken features of the current culture and highlights the benefits of a smart built culture that is integrated, collaborative and cooperative. Join James L. Salmon, Esq. of Collaborative Construction for an opportunity to build Katy’s Castle live.

In the article excerpted and linked below Mark Wakeford, the Managing Director of Stepnell, Ltd out of the UK comments on the dangerous nature of the "cash generation" and "hibernation" business models prevalent in the construction industry. Mark's insightful analysis deserves the attention of advocates of BIM and IPD as he lays bare the dangers associated with running an entire enterprise through the OPX side of the books and neglecting targeted CAPX investments.

OPX is short hand for operating expense and CAPX, of course, refers to capital expense. Construction companies are notorious for running expenses through operations and neglecting capital investments. Mark's article describe the bumpy ride associated with the "cash generation" model during a boom and the "hibernation" during a bust.

Mark describes the intersection of these two models as follows:

This hibernation model, coupled with the cash generating model for contracting, explains a number of pressures that contractors are facing as we emerge from recession. A long hibernation period, as we have faced since 2009, means that companies have used more of their financial resources than they may have anticipated during the recession. As a result these companies have less funds and they now need to win work to generate the cash required to support their businesses. One result is that competitive tenders remain highly competitive at a time when input prices are rapidly increasing.

While Mark's article accurately describes certain deficiencies in the alternating "cash generation / hibernation" business models his solution is simply a gentle reminder of the need to diversify revenue streams, primarily through owning income generating properties. Specifically, Mark says:

If this construction business model is unsuitable for this phase of the economic cycle then what is appropriate? Clearly a business that generates a return during a recession is more robust as it can invest and prepare for an improving market. Historically, contractors used to hold significant property interests that provided both an income during recession and assets to support a growing turnover post-recession. Other models exist, but this is the one that Stepnell follows as our historic property interests support our construction activities.

Not every enterprise that delivers services in the construction industry has the ability to invest in real property that generates income during an economic downturn. Large well managed construction firms with deep pockets may have that luxury, but not the vast majority of the stakeholders in the industry. In fact, more than 98% of the business entities that deliver planning, design and construction services in the United States have 50 or fewer employees. Similar numbers are seen in Europe, Asia and Australia. However, the fact that most in the industry lack the resources to successfully execute the hibernation half of the "cash generation / hibernation" business models takes nothing away from Mark's criticism of those models.

Lack of liquidity and access to capital reinforces, rather than detracts from, the argument Mark is making. So what's the key problem? How do we solve that problem? And where, strategically does the industry go from here?

The built industry's problem is a waste rate of 50% to 60% on capital projects, manifested by the Fifty (5) Years of Failure to improve labor productivity in the industry.

The solution to that is to form, deploy and utilize integrated teams capable of better planning, design and construction processes in a trust based environment. In construction this is known as integrated project delivery or IPD.

The best strategy is to creating a smart built culture that supports and enables the formation, deployment and utilization of integrated teams in a trust based environment.

In addition to reliance on the inefficient business models of "cash generation / hibernation" the industry relies on a defective delivery model, design, bid build & its economic spawn, profits extracted from waste. That defective delivery model exacerbates the pain inflicted by the defective business models Mark described. While even a flat worm turns away from pain, not the construction industry. We wallow in the misery. Smart collaborative delivery models, like integrated project delivery, where profits are earned by adding value mitigate the risks better and built industry players that want to survive in the emerging knowledge economy will adopt, adapt to and deploy smart built cultures.

Friday, December 12, 2014

Ancient philosophers wrote in an esoteric style because telling the plain unvarnished truth could get them killed. Below are excerpts from and a link to Paul Cantor's review of Arthur Metzler's Philosophy Between the Lines. Cantor argues that Metzer's insights into esoteric writing help explain modern culture too.

In the passage below Cantor explains the rationale underlying the use of an esoteric writing style by philosophers.

Imagine, then, the plight of philosophers who commit their dangerous thoughts to writing and thereby threaten to publicize their disagreements with the political and religious establishments. Philosophers had to learn an art of writing that would enable them at one and the same time to conceal and reveal their thoughts—to conceal their unorthodox ideas from a potentially hostile public and yet reveal them to like-minded, potential philosophers whom they wished to develop as students. The result was the famous “double doctrine of the ancient philosophers.” They learned to write in such a way that their works had an exoteric and an esoteric meaning, a conventional meaning on the surface that would placate would-be censors and persecutors, and an unconventional meaning tucked away between the lines, which careful readers could figure out by paying attention to various anomalies in the text.

Next he expands on the value of understanding the impact of these esoteric ploys on modern culture.

In short, Melzer shows how much is at stake in the subject of esoteric writing: no less than the issue of the freedom of the human intellect. By losing sight of esotericism, modern thinkers have radically changed their conception of philosophy and have come to question its original claim to be the search for true knowledge as opposed to the limited opinions of particular political communities. In the terms of Plato’s Republic, contemporary thinkers deny that the philosopher can ever ascend from the intellectual cave constituted by the city. In his most significant contribution, Melzer argues persuasively against this view, insisting that only an understanding of the use of esoteric writing in earlier philosophers can alert us to a perennial human potentiality: freedom of thought. In Melzer’s view, grasping the importance of esoteric writing is a liberating and inspiring experience:

The whole course of Western philosophical thought is not so well-known and settled as we have long thought it to be. Beneath its conventional exterior, it is more daring, original, and alive.

Individuals and entities walking the tight rope of politically correctness may find value in the use of esoteric writing, marketing and news releases that assuage the high priests of politically correct thought while delving into critically important matters beneath the surface. I see many in the built industry utilizing esoteric language to mollify green activists while delivering more valuable analysis to those willing to dig a little deeper.

Monday, December 8, 2014

Measuring productivity in any enterprise is critical to success. If the cost of a project, measured in time, materials, labor and other resources is unknown, or at best murky, pricing the project accurately presents challenges. In construction, which confronts the iron triangle of cost, quality and schedule daily, lack of precision presents all stakeholders with opportunities for graft and risks of loss. Our antiquated procurement methods - design bid build chief among them - exacerbate these problems. Dr. Teicholz at Stanford University brilliantly addresses the labor prong of the issue in his most recent article in AECbytes titled Labor-Productivity Declines in the Construction Industry: Causes and Remedies (Another Look). I linked to the article last week and wanted to share Dr. Teicholz's introduction to the statistics that control the debate. His insights deserve careful analysis by advocates of BIM and IPD in construction and I encourage readers to take a long hard look at the article and think about all the ways the lack of productivity in labor impact and are impacted by defective logistics in construction. Our inability to deliver personnel and or materials to the site "just in time" as manufacturers do negatively impacts our ability, as an industry, to impact the iron triangle of cost, quality and schedule in a positive manner. Bill Standish's company, Stangate Management, Inc. is working hard to solve the logistics problem in the Midwest, but much work remains.

Dr. Teicholz's introduction to the critical statistics, vis a vi labor in construction, is excerpted below.

The definition of labor productivity at the task level is quite simple: output per work hour, e.g.,50 SF per work hour of wall forms built to a given specification at grade level. However, when measuring the output of entire industry rather than a task, output is defined in dollars of revenue (for a given base year) per work hour. There are two US Government agencies that measure the outputs and inputs of almost all industries. The Census Bureau (CB) focuses primarily on outputs (such as the C30 series of construction industry output) and the dollar value of inputs, while the Bureau of Labor Standards (BLS) focuses on labor inputs and many other measures of labor. The data sets produced by these groups are updated weekly, monthly, annually,and for the Census Bureau, every 5 years in their Economic Census. BLS does calculate labor productivity for some industries, e.g., manufacturing and all non-farm industries, but does not do so for the construction industry. It requires careful use of the available data to make valid comparisons over time and within different sectors of the construction industry. A third government agency, the Bureau of Economic Analysis (BEA) takes the data collected by other agencies (CB, BLS, and others) to develop GDP, Value Added, Input/Output analyses and other measures of US economic activity. Using the data from these three sources provides many insights into the construction industry.

Here's another LINK to the article. Print it, read it, analyze it and solve the problems highlighted in it on your next project!

Friday, December 5, 2014

My good friend Oscia Wilson, the founder and president of Boiled Architecture, knocks the question out of the park. Oscia is also the the author of The Owners Guide to Starting Integrated Projects. I strongly encourage you to click the link and get a copy of that book on your shelf! Anyway, she received the question through the Boiled Architecture website and, as noted above, she knocked the question out of the park. Below is short excerpt of her rationale along with the killer graphic she posted and a link to the blog post. Call her if you need a BIM and IPD enabled architect on your team!

My answer is "Anything smaller than a dog house, doll house or wood shed." but Oscia is more polite and thoughtful than me.

As Oscia argues:

IPD projects heretofore have been large projects–many of them were new hospitals. Many of them had more than a dozen companies signed onto the multi-party agreements. These typical IPD projects have project teams of several hundred people.

Of course it takes a long time to get a dozen companies to agree to a contract they’ve never done before, especially when millions of dollars are at stake.

Of course it takes a long time and a lot of effort to teach hundreds of individuals how to work together in radical collaboration and un-learn their bad habits.

And yes, when you want hundreds of people to collaborate for 5-8 years, you absolutely need a giant colocation space with its own dedicated server and technology solutions. These take time and money to set up.

"I'm from the government and I'm here to help!" Oh wait, that's not it. Here you go,

"Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience. They may be more likely to go to Heaven yet at the same time likelier to make a Hell of earth. This very kindness stings with intolerable insult. To be "cured" against one's will and cured of states which we may not regard as disease is to be put on a level of those who have not yet reached the age of reason or those who never will; to be classed with infants, imbeciles, and domestic animals."

-- C.S. Lewis, God in the Dock: Essays on Theology (Making of Modern Theology)

As an advocate of building information modeling, (BIM) it's kissing cousins virtual design and construction, (VDC) and integrated project delivery, (IPD) I closely follow developments in the construction industry. In 2001 I read an article by Dr. Paul Teicholz in which he detailed deficiencies in the labor productivity rate in construction. As a construction lawyer involved in the triage of failed construction projects I was keenly aware of the failure points that lead to low productivity rates in the industry. The 2001 article highlighted fundamental failings in the construction industry and I began to question the wisdom of the legal framework within which I operated on behalf of my clients.

Dr. Teicholz's article gnawed at my conscience and I eventually launched Collaborative Construction, which regular readers know provides preventive legal services and collaborative consulting to the construction industry. Dr. Teicholz recently published a follow up study in AECbytes Viewpoint #67 (March 14, 2013) titled Labor Productivity in the Construction Industry: Causes and Remedies (Another Look), and like the initial article in 2001, the study commands the attention of the industry.

I tell clients' all the time there is a 40% to 60% rate of waste on capital projects and they routinely push back, arguing there are no lean six sigma style studies in the construction industry that confirm those claims. I counter those arguments with a detailed review of Dr. Teicholz's study. The keystone of his analysis is the chart below that shows the stagnant nature of labor-productivity rates in construction compared to all non-farm industries.

While the chart ends in 2012 we know the trends continue and we are now at the 50 year mark. How much longer will we wallow in this failure as an industry?

Dr. Teicholz identifies the problem with ruthless precision and the outlines a number of potential solutions as well. It's time for the industry to step to the plate. Below I've outlined the problem, solution and strategy in simple terms. This is the approach Collaborative Construction and its allies, like FirstPlan, LLC, and Benjamin Yocum & Heather, LLC take. If you have questions about how to create a smart built culture within your organization please call.

Problem: The industry wastes 40% to 60% of the labor, materials and time invested in capital projects.

About Us

James is President of Collaborative Construction Resources, (CCR) a company that empowers stakeholders in the U.S Construction Industry to utilize collaborative agreements, BIM and lean construction methods to deliver construction services more efficiently and productively. James is an experienced construction lawyer and he serves on both the National Building Information Model Standards (NBIMS) Project Committee and the Build SMART Alliance's Business Process Integration Task Team, (BPITT). Consumers of construction services want to see increased efficiency and productivity in the industry and James is working hard to make that happen!
James and his family live in Fort Thomas, Kentucky. You can contact James at 859-441-6033 or by email at James.Salmon [at sign] CollaborativeCR.com